Are you familiar with Newsweek?
It’s the once-popular magazine founded in 1933 and backed by the Astor and Mellon families. It was later on acquired in 1961 by the Washington Post Company which was controlled by the Graham family. It was considered one of the highest selling magazines of its time as it thrived for decades. However, things turned around when the Internet era erupted and the magazine’s readership and advertisers slid down. That’s the time the Graham family decided to give it up for $1.
Copies of Newsweek magazine are arranged for a photograph in New York US on Tuesday June 1 2010 Ritchie Capital Management LLC Chief Executive Officer Thane Ritchie and private-equity firm OpenGate Capital LLC both said yesterday they are considering offers for Washington Post Cos Newsweek magazine as the first deadline for bidders approaches Photographer Daniel AckerBloomberg
Businessman Sandy Harman bought the magazine for $1 in 2010, along with about $40 million in liabilities. Harman partnered with Barry Diller of IAC and put a substantial investment into the magazine in an effort to revitalize the brand. Tina Brown, Mr. Diller’s star editor assigned to be in charge of the magazine revival, failed to bring the magazine back in active circulation. The magazine finally folded up.
Another brave taker, IBT Media, a small digital publishing company owned by Etienne Uzac and Johnathan Davis, both in their early 30s, saw a growth path in Newsweek and bought the magazine in summer of 2013. Mr. Uzac and Mr. Davis started the website International Business Times (IBT) in 2006 when they met after college through campus Christian fellowships. With money they scraped together from family and friends, Mr. Uzac handled selling ads while Mr. Davis did the programming and wrote the articles.
Growing a Small Digital Company
Through their hard work and effort, IBT had grown slowly and in 2010 it had 10 employees and $2 million in revenue. Today, IBT has 240 employees and posted $21 million in revenue in 2013, most of which came from digital banner ads.
Recreating Newsweeek as a Web-Only Magazine
The founders of IBT believed that they could recreate Newsweek as a web-only magazine. They were able to triple the online traffic of the newsweekly magazine. And they believe they are ready to launch the magazine’s comeback by reintroducing the magazine on the new printing presses. They released the first printed edition of Newsweek over the weekend of March 7, 2014.
According to Newsweek’s Jim Impoco, the magazine’s editor-in-chief, IBT did not really plan to bring it back into print. Mr. Uzac said they have been receiving requests to have the magazine printed again. Cognizant that printing the magazine would not be viable, he studied the economics of it and decided IBT could sell some copies for a much higher value than what it cost to make them.
Making Newsweek a Luxury Product
Mr. Uzac’s projection is for IBT to print 70,000 copies of Newsweek – a small fraction of its circulation of 3.3 million 20 years back. They’re looking at selling the magazine for $7.99 and they will make the magazine’s content available online for a much lower price. Mr. Uzac said readers would only pay if they don’t want to read the magazine’s content on their desktop’s or laptop’s backlit screen, making it a luxury product.
While some in the industry considers the move a good business decision, Newsweek’s reappearance in print couldn’t have come at a more awkward moment. Time, Inc., the parent company of Sports Illustrated and Time magazine – Newsweek’s longtime rival, has recently cut their workforce by about 500 people. This is in addition to the fact that newsstand sales of printed consumer magazines fell 11% in the second half of 2013, as reported by the Alliance for Audited Media.
Hence, many are asking, is returning Newsweek to the newsstand a good idea after all?